STOPPED IN ITS TRACKS
Business Today|October 03, 2021
THE INDIAN RAILWAYS’ PLAN FOR PRIVATE PASSENGER TRAINS GARNERED ONLY TWO BIDS, THWARTING ITS PLANS TO SHORE UP ITS FINANCES. WHAT WENT WRONG AND WHAT IS THE WAY AHEAD?
ASHUTOSH KUMAR
STOPPED IN ITS TRACKS

RAIL BHAWAN in New Delhi houses the railway ministry’s apex decision-makers, including the railway minister. Somnolent during the initial months of the lockdown last year, the place was abuzz with activity in June 2020 as the halting of all passenger trains ravaged the Indian Railways’ already dismal finances. Freight volumes, at 241.66 million tonnes, were down 21 per cent in Q1 of FY20-21 compared to Q1 of FY2019-20. (Passenger receipts have been lowered 75 per cent in revised estimates for FY21 to ₹15,000 crores from the Budget estimate of ₹61,000 crore.)

To curtail the losses, the ministry decided to take the plunge on private passenger trains—a plan it had set in motion some time back by asking its public sector entity, Rail India Technical and Economic Service Ltd (RITES Ltd), to prepare a feasibility report. Such a public-private partnership (PPP) was a first as the government has always controlled the passenger segment, guided by the philosophy that the private sector would neglect the Railways’ social accountability. Now, though, the possibility of a world-class, on-time travel experience held more promise. As did the government’s potential to earn a pretty penny.

The idea was that the Indian Railways would provide the requisite supporting infrastructure and staff, such as pilots and guards, to the private operators. In return, the operators would pay fixed haulage charges, such as for electricity and track maintenance, as also a portion of revenue. The net present value (NPV) of the revenue share, assuming a 10 per cent cut, would be ₹10,463 crore, according to RITES’s feasibility report. And the NPV of haulage charge would total ₹26,346 crore.

This story is from the October 03, 2021 edition of Business Today.

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This story is from the October 03, 2021 edition of Business Today.

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